AGE Daily Gold Update

AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.

1/5/2022: Gold gains then falls after Fed

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.6% to close the regular session above $1,825 as risk appetite and the dollar weakened on concerns about the fast-spreading omicron variant. But the metal pulled back to $1,810 in electronic trading after hawkish minutes from the Federal Reserve were released late in the day.

At its December meeting, most Fed members advocated raising interest “sooner and at a faster pace” than previously expected, according to the latest minutes. A minority were also eager to begin reducing the central bank’s $8.7 trillion balance sheet as an additional way to cool what they see as runaway inflation.

All three major US stock indexes tumbled after the Fed minutes, with the Dow and S&P 500 losing 1.1% and 2%, respectively, while the tech-heavy Nasdaq plummeted 3.3%.

Benchmark 10-year Treasury yields climbed above 1.7% to the highest level since early April, while 2-year yields jumped to the highest level in almost two years. Rising yields weigh on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar recouped all of it earlier 0.7% as traders speculated that the increasingly hawkish central bank will raise interest rates in March and likely three times next year.

Gold remains supported by uncertainty about the impact of the raging omicron variant on the US and global economies, as well as by demand for the metal as a hedge against the strongest inflation in more than 30 years.

Data from ADP showing 807,000 jobs were added to private payrolls in December had little effect on the markets.

The other precious metals were higher in regular trading, with silver adding 0.5% while platinum and palladium rose 3.2% and 2.3%, respectively, before weakening post-Fed minutes.

At the Comex close: February gold gained $10.50 to $1,825.10; March silver picked up 11 cents to $23.17; April platinum rose $30.70 to $1,001.90; and March palladium climbed $42.90 to $1,902.60 an ounce.